Personal Loans Explained

Need money in a hurry without having to go through tedious documentation processing? Want cash to fulfill your need without having to explain the reason for obtaining the loan? Then personal loans are your best ally. You can get them easily in a period as short as 24 hours. All that is needed is to fill out an application form with the lender and the cheque would be delivered to your doorstep within a few days or credited to your bank account.

If you are self-employed or salaried, there may be times when you need instant cash for emergencies of different kinds, and then you could go for a personal loan. Timing and speed are vital factors while choosing a personal loan across various institutions.

Numerous uses of Personal loans are domestic or foreign travel, medical treatment for self or family members, education, marriage, business expansion, working capital, working requirements and meeting margin money for purchase of assets and so on and so forth.

Some banks provide loans only to salaried people and not to self-employed individuals.

Some institutions take few hours to process the loan, others may take 3-4 days including one day for field investigation.

Personal loans are available up to Rs 20 lakh depending on the type of institution or bank.

The Credit Information Report (CIR) plays a crucial role in a lender’s decision to approve a loan application.

Interest rates: Employees of category ‘A’ companies the lending rate is around 14 % per annum, of category ‘B’ companies it is 15-16 %, and it is higher at 18 % for category ‘C’ companies. The rate of interest varies from 14-21% and the period from 12-60 months.

Documents required: Documentation includes proof of identity, residence, income and bank statements for 3-6 months.

Processing fees: Starts from 1.5 % and above on the loan amount.

Pre-closure charges: Depend on the institution, but foreclosure before six months is not encouraged.